Lululemon stock price target lowered to $270 at CFRA on product issues

Investing.com - CFRA has lowered its price target on Lululemon Athletica Inc. (NASDAQ:LULU) to $270 from $375 while maintaining a Strong Buy rating, citing product issues and tariff headwinds. The stock, currently trading at $166.93, appears undervalued according to InvestingPro’s Fair Value analysis.

The athletic apparel retailer reported second-quarter normalized earnings per share of $3.10, down from $3.15 year-over-year but exceeding consensus estimates by $0.24. Revenue reached $2.53 billion, falling short of estimates by $15 million. Despite challenges, the company maintains impressive gross profit margins of 59.1%.

Regional performance showed diverging trends, with Americas net revenue increasing just 1% year-over-year while International revenue grew 22%. Comparable store sales in the Americas declined 4% as the company lost market share, contrasting with a 15% increase in International comparable sales.

Management described the company’s product catalog as "stale" and "predictable" during their commentary, signaling internal recognition of merchandise challenges facing the retailer.

CFRA reduced its fiscal 2026 and 2027 earnings per share estimates by $2.00 each to $13.00 and $15.00 respectively, while noting that Lululemon shares currently trade around 13 times consensus earnings estimates for the next 12 months, well below historical and peer multiples.

In other recent news, Lululemon Athletica Inc. reported second-quarter revenue of $2.53 billion, slightly missing analyst expectations of $2.54 billion. The company also projected third-quarter earnings per share between $2.18 and $2.23, which is below the consensus estimate of $2.90. This has led to a significant reduction in the company’s full-year guidance, contributing to concerns in the athletic apparel market. Truist Securities downgraded Lululemon from Buy to Hold, lowering the price target to $170 due to disappointing second-quarter results and tariff concerns. Meanwhile, Piper Sandler maintained a Neutral rating but reduced its price target to $165, citing fatigue in the casual wear categories. Bernstein also adjusted its price target from $350 to $220, maintaining an Outperform rating while noting challenges in the U.S. market and potential deceleration in China. Despite these challenges, Truist Securities reiterated a Buy rating with a $290 price target, indicating some analysts remain optimistic about the company’s long-term prospects. These recent developments reflect a challenging outlook for Lululemon as it navigates market dynamics and consumer trends.

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